CASE NO UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Transcription

1 CASE NO UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT UMG RECORDINGS, INC.; UNIVERSAL MUSIC CORP.; SONGS OF UNIVERSAL, INC.; UNIVERSAL-POLYGRAM INTERNATIONAL PUBLISHING, INC.; RONDOR MUSIC INTERNATIONAL, INC.; UNIVERSAL MUSIC-MGB NA LLC; UNIVERSAL MUSIC- Z TUNES LLC; UNIVERSAL MUSIC MGB MUSIC PUBLISHING LTD., V. VEOH NETWORKS, INC. PLAINTIFFS-APPELLANTS, DEFENDANTS-APPELLEES. On Appeal From The United States District Court For The Central District of California, Western Division Los Angeles District Court Case No Honorable A. Howard Matz, District Judge BRIEF OF AMICI CURIAE ELECTRONIC FRONTIER FOUNDATION, INTERNET ARCHIVE, AMERICAN LIBRARY ASSOCIATION, ASSOCIATION OF RESEARCH LIBRARIES, ASSOCIATION OF COLLEGE AND RESEARCH LIBRARIES, COMPUTER AND COMMUNICATIONS INDUSTRY ASSOCIATION, PUBLIC KNOWLEDGE, CENTER FOR DEMOCRACY AND TECHNOLOGY AND NETCOALITION IN SUPPORT OF APPELLEES AND AFFIRMANCE Corynne McSherry (SBN ) Michael Barclay (SBN 88993) ELECTRONIC FRONTIER FOUNDATION & INTERNET ARCHIVE 454 Shotwell Street San Francisco, CA Telephone: (415) Facsimile: (415) corynne@eff.org Attorneys for Amici Curiae

2 TABLE OF CONTENTS TABLE OF AUTHORITIES...ii CORPORATE DISCLOSURE STATEMENT... v STATEMENTS OF INTEREST... 1 INTRODUCTION... 4 ARGUMENT... 5 I. Congress Intended Section 512 to Reduce Legal Uncertainty for Service Providers... 5 II. III. A. Congress s Intent Generally... 5 B. Section 512 s Structure... 7 Reducing Legal Uncertainties for Service Providers Is Critical to Free Expression Online... 9 UMG s Arguments Contradict the Language, Structure and Purpose of 512(c), Increasing Legal Uncertainty at Every Turn A. UMG and Its Amici Misread the Scope of Section 512(c) B. UMG s Interpretation of the Knowledge Disqualifier Would Also Increase Legal Uncertainties Facing Online Service Providers C. UMG s Interpretation of the Control and Benefit Disqualifier Would Make Section 512(c) Inapplicable to Vicarious Liability Claims IV. Section 512 Encourages Voluntary Policing by Service Providers CONCLUSION i

3 TABLE OF AUTHORITIES Cases Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090 (W.D. Wash. 2004) Cosmetic Ideas, Inc. v. IAC/Interactivecorp., 606 F.3d 612 (9th Cir. 2010) CoStar Group Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004), aff d, 373 F.3d 544 (4th Cir. 2004)... 7, 17 Ellison v. Robertson, 357 F.3d 1072 (9th Cir. 2004) Hendrickson v. ebay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) Io Group, Inc. v. Veoh Network, Inc., 586 F. Supp. 2d 1132 (N.D. Cal. 2008) Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004) Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) Perfect 10, Inc. v. CCBill, LLC, 488 F.3d 1102 (9th Cir. 2007) Perfect 10, Inc. v. VISA Int l Serv. Ass n, 494 F.3d 788 (9th Cir. 2007) Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) UMG Recordings, Inc. v. Veoh Networks, Inc., 620 F. Supp. 2d 1081 (C.D. Cal. 2008) UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp. 2d 1099 (C.D. Cal. 2009)...19, 21, 22, 24 Viacom Int l, Inc. v. YouTube Inc., Nos , , 2010 WL (S.D.N.Y June 23, 2010)... 13, 21 ii

4 Statutes 17 U.S.C passim 17 U.S.C. 512(c)... passim 17 U.S.C. 512(c)(1)... 8, 13, U.S.C. 512(c)(1)(A)... 17, U.S.C. 512(c)(1)(B)... 12, U.S.C. 512(c)(1)(C)... 8, 18, U.S.C. 512(c)(2) U.S.C. 512(c)(3)(A)... 18, U.S.C. 512(c)(3)(B)... 18, U.S.C. 512(c)(3)(B)(i) U.S.C. 512(h) U.S.C. 512(i)(1)(B) U.S.C. 512(m)... 20, U.S.C. 512(m)(1)... 8 Other Authorities 144 CONG. REC. H10618 (1998) CONG. REC. H7092 (1998) MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT 12B.01[A][1] (2005)... 7, 11, 19 Copyright Infringement Liability of Online and Internet Service Providers: Hearing Before the Committee on the Judiciary United States Senate on S. 1146, 105th Cong. 29 (1997)... 7 H.R. REP. NO , Part I (1998)... 9 H.R. REP. NO , Part II (1998)...9, 16, 18, 22 H.R. REP. NO (1998)... 9 iii

5 S. REP. NO (1998)... passim See WIPO Copyright Treaties Implementation Act and Online Copyright Liability Limitation Act: Hearing Before the H. Subcomm. on Courts and Intellectual Property on H.R and H.R. 2280, 105th Cong. 102 (1997)... 9 iv

6 CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, Amici Curiae the Electronic Frontier Foundation, the Internet Archive, the American Library Association (which includes the Association of College and Research Libraries), the Association of Research Libraries, the Computer and Communications Industry Association, Public Knowledge, Center for Democracy and Technology and NetCoalition (collectively, amici ) state that none of amici have a parent corporation and that no publicly held corporation owns 10% or more of the stock of any of amici. v

7 STATEMENTS OF INTEREST Amici submit this brief pursuant to FED. R. APP. P. 29(a) and (b), and the accompanying motion for leave to file this brief amicus curiae. The Electronic Frontier Foundation ( EFF ) is a nonprofit civil liberties organization that has worked for over twenty years to protect consumer interests, innovation, and free expression in the digital world. EFF and its more than 14,000 dues-paying members have a strong interest in helping the courts and policymakers ensure that copyright law serves public interest. The Internet Archive is a 501(c)(3) non-profit founded in 1996 to build an Internet library. Its purposes include offering permanent access for researchers, historians, scholars, people with disabilities, and the general public to historical collections that exist in digital format. The Archive s collections include digital audio, video, software and texts contributed by individuals, including more than 200,000 digital audio recordings and 60,000 live concert recordings. Accordingly, the Archive has a direct interest in the proper application of copyright law to Internet intermediaries. The American Library Association ( ALA ), established in 1876, is a nonprofit professional organization of more than 65,000 librarians, library trustees, and other friends of libraries dedicated to providing and improving library services and promoting the public interest in a free and open information society. The Association of College and Research Libraries ( ACRL ), the largest division of the ALA, is a professional association of academic and research librarians and other interested individuals. It is dedicated to enhancing the ability of academic library and information professionals to serve the information needs of the higher education community and to improve learning, teaching, and research. The Association of Research Libraries ( ARL ) is a nonprofit organization 1

8 of 125 research libraries in North America. ARL s members include university libraries, public libraries, and government and national libraries. ARL influences the changing environment of scholarly communication and the public policies that affect research libraries and the diverse communities they serve. The Computer & Communications Industry Association ( CCIA ) is a nonprofit trade association dedicated to open markets, open systems and open networks. CCIA represents companies in the high technology products and services sectors, including computer hardware and software, electronic commerce, telecommunications and Internet products and services. More information on CCIA members is available online at Public Knowledge is a non-profit public interest organization devoted to protecting citizens rights in the emerging digital information culture and focused on the intersection of intellectual property and technology. Public Knowledge seeks to guard the rights of consumers, innovators, and creators at all layers of our culture through legislative, administrative, grassroots, and legal efforts, including regular participation in copyright and other intellectual property cases that threaten consumers, trade, and innovation. The Center for Democracy & Technology ( CDT ) is a nonprofit public interest group that seeks to promote free expression, privacy, individual liberty, and technological innovation on the open, decentralized Internet. CDT advocates balanced copyright policies that provide appropriate protections to creators without curtailing the openness and innovation that have been vital to realizing the democratizing potential of new digital media. NetCoalition is an industry association that serves as the public policy voice for some of the world s most innovative Internet companies on legislative and administrative proposals affecting the online realm. NetCoalition s members 2

9 include Amazon.com, Bloomberg LP, ebay, IAC, Google, Wikipedia, and Yahoo!. 3

10 INTRODUCTION Over the last decade, the Internet has grown into an extraordinary platform for free speech and creative expression. Never before have so many citizens been able to reach an audience across so many mediums at such low cost. All of this activity depends upon a thriving marketplace of innovative online service providers including both nonprofits like Wikipedia and the Internet Archive and commercial ventures like Veoh, YouTube, MySpace, Facebook, Blogger, and Flickr providing inexpensive (or free) public platforms for expression. Because changes to the legal climate for these service providers can have profound consequences for free expression online, proper interpretation of copyright laws as applied to online service providers is a matter of crucial public interest. Appellants here (collectively UMG ) assert that this case poses the question of whether different rules apply in the internet realm. Appellant s Brief at 4, UMG Recordings, Inc. v. Veoh Networks, Inc., No (9th Cir. June 17, 2010) [hereinafter UMG Br. ]. The answer, simply put, is yes. Congress deliberately created different rules for online service providers in Title II of the Digital Millennium Copyright Act ( DMCA ), codified in 512 of the Copyright Act. 1 In order to stimulate the growth of the Internet and electronic commerce, Congress created a set of statutory safe harbors that helped service providers predict and manage their legal exposure to copyright infringement liability. This effort proved to be a huge success, encouraging not only the growth of the Internet generally, but the growth of innovative platforms for free expression in particular. In this appeal, UMG and its supporting amici attempt to thwart Congress s intent and turn back the clock on the DMCA. They seek to reinstate a climate of 1 All statutory references are to Title 17 of the United States Code unless otherwise noted. 4

11 legal uncertainty that would harm both innovative online services and the free expression they foster. In effect, UMG seeks to re-write the 512(c) safe harbor so as to (1) exclude virtually every online service provider that hosts material on behalf of Internet users and makes it accessible; (2) replace 512(c) s detailed notice-and-takedown regime with courtroom battles over general knowledge of infringements; and (3) eliminate the safe harbors with respect to vicarious liability. Endorsement of UMG s views by any court would gravely threaten the profusion of online services that have benefited the public. Moreover, UMG s radical reinterpretation of 512 is not necessary to protect the interests of copyright owners. The notice-and-takedown regime created by 512 has given copyright owners a streamlined process for removing infringing content, while also encouraging voluntary cooperation between content owners and service providers to police infringement. In the interests of protecting the free expression of the millions of Internet users who are not committing copyright infringement, amici urge the Court to affirm the district court ruling and reject UMG s effort to undermine the 512(c) safe harbor. ARGUMENT I. Congress Intended Section 512 to Reduce Legal Uncertainty for Service Providers A. Congress s Intent Generally Congress intended the DMCA to facilitate the robust development and world-wide expansion of electronic commerce, communications, research, development, and education.... S. REP. NO , at 1-2 (1998). 2 [B]y 2 Much of the DMCA s legislative history has been compiled by the Home Recording Rights Coalition at (last visited July 21, 2010). 5

12 limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand. Id. at 8. In order to accomplish these goals, Congress created a set of safe harbors designed to provide greater certainty to service providers concerning their legal exposure for infringements that may occur in the course of their activities. Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004) (quoting S. REP. NO , at 20 (1998)) (emphasis added). Congress focused on creating a more predictable legal environment because it recognized that: [W]ithout clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet. In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites. Many service providers engage in directing users to sites in response to inquiries by users or they volunteer sites that users may find attractive. Some of these sites might contain infringing material. In short, by limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand. S. REP. NO , at 8. Thus, Congress correctly understood that the application of ambiguous copyright doctrines to new Internet technologies would put service providers in an impossible position. Service providers necessarily must make, manipulate, and transmit multiple copies of content at several stages of their technical processes. These multiple copies might arguably infringe one or more of the display, performance, distribution, reproduction, or other rights in copyrighted content. 6

13 During the Senate hearings preceding the DMCA, Roy Neel, President and Chief Executive of the United States Telecom Association stated the problem as follows: We have no way of knowing what those trillions of bits of information are flowing over our networks. We simply cannot do it, and to be held liable for those transmissions is simply nonsense and it will tie us up in court, create more litigation and more work for lawyers, but won t do anything to advance the construction and deployment of the Internet, nor will it protect copyright owners to any significant degree. Copyright Infringement Liability of Online and Internet Service Providers: Hearing Before the Committee on the Judiciary United States Senate on S. 1146, 105th Cong. 29 (1997); 3 see also S. REP. NO , at 30. In fact, by the time Congress took up the issue in 1997, online service providers had already been embroiled in copyright litigation over the activities of their users. 4 Thus, Congress enacted safe harbors for secondary liability that were absolutely necessary to the immediate survival of ISPs. CoStar Group Inc. v. LoopNet, Inc., 373 F.3d 544, 555 (4th Cir. 2004), aff d, 373 F.3d 544 (4th Cir. 2004). B. Section 512 s Structure The structure of 512 reflects Congress s desire to provide service providers with predictable rules in place of the murky, judge-made standards that characterize copyright s secondary liability doctrines. See 3 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT 12B.01[A][1] (2005) (describing conflicting jurisprudence prior to 1998). The statute creates four safe harbors with detailed provisions setting out rules of the road for service providers. If their activities fall within one of the safe harbors, service providers may opt in to this 3 Transcripts of the Sept. 4, 1997 hearings are available at: 4 See, e.g., Jeffrey R. Kuester & Daniel R. McClure, SPA v. ISPs: Contributory Copyright Infringement in Cyberspace, INTELLECTUAL PROPERTY TODAY, Feb. 1997, at 8 (describing lawsuits by the Software Publishers Ass n against online service providers). 7

14 alternate, more definite, set of rules by meeting specific statutory prerequisites. 5 Thus, for example, Section 512 does not require use of the notice and takedown procedure. A service provider wishing to benefit from the limitation of liability under subsection (c) [must do so]... On the other hand, the service provider is free to refuse to takedown the material or site, even after receiving a notification of claimed infringement from the copyright owner; in such a situation, the service provider s liability, if any, will be decided without reference to 512(c). S. REP. NO , at 45. Put another way, if the service provider chooses to comply with 512 procedures, ordinary copyright liability rules will not apply, and vice versa. The statute also clarifies the limits of a service provider s obligations for example, by making it clear that a service provider need not monitor its service or affirmatively seek facts indicating infringing activity in order to enjoy the safe harbor. See 17 U.S.C. 512 (m)(1). In return, copyright owners were given several new remedies against infringers. The first of these is an expedited, extrajudicial notice-and-takedown procedure for obtaining redress against alleged infringement. 512(c)(1)(C). Second, copyright owners were given the power to issue pre-complaint subpoenas to service providers like Veoh in order to identify and locate infringing Internet users. 512(h). This level of statutory detail stands in stark contrast to the ambiguous judgemade legal standards that would otherwise govern the activities of service providers. Compare Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, (9th Cir. 2007) (discussing secondary liability principles applicable to online service providers) with Perfect 10, Inc. v. VISA Int l Serv. Ass n, 494 F.3d 788, 5 These statutory prerequisites include (1) registering a Copyright Agent, 512(c)(2); (2) implementing a notice-and-takedown policy, 512(c)(1)(C); (3) accommodating standard technical measures, 512(i)(1)(B); and (4) adopting a policy of terminating repeat infringers, 512(i)(1)(A). 8

15 (9th Cir. 2007) (Kozinski, J., dissenting) (pointing out contradictions in secondary liability standards as applied to service providers). Congress s desire to reduce legal uncertainty for service providers is also amply demonstrated in the legislative history both in testimony before Congress regarding the legislation that would become the DMCA, 6 and in the legislative committee reports that accompanied the DMCA. 7 In short, the statutory language, structure, and legislative history all indicate that Congress intended 512 to reduce the legal uncertainty that service providers would otherwise face in order to foster the growth of the Internet. II. Reducing Legal Uncertainties for Service Providers Is Critical to Free Expression Online. One of Congress s principal motivations for establishing clear rules regarding intermediary liability for the acts of users was to foster the development of the Internet as a platform for free expression. In the words of Rep. Barney Frank: One of the things we do here is to say: If you are an on-line service provider, if you are responsible for the production of all of this out to the public, you will not be held automatically responsible if someone 6 See WIPO Copyright Treaties Implementation Act and Online Copyright Liability Limitation Act: Hearing Before the H. Subcomm. on Courts and Intellectual Property on H.R and H.R. 2280, 105th Cong. 123, 102 (1997) (statement of Representative Boucher about providing stability in the law and giving the Internet service providers the assurances they need to invest in the Internet). 7 See H.R. REP. NO , at 72 (1998) (Conf. Rep.) (Section 512 provides greater certainty to service providers concerning their legal exposure for infringements that may occur in the course of their activities ); H.R. REP. NO , Part II, at (1998) (same); S. REP. NO , at 20 (1998) (same); H.R. REP. NO , Part I, at 11 (1998) ( [w]hile several judicially created doctrines currently address the question of when liability is appropriate, providers have sought greater certainty through legislation as to how these doctrines will apply in the digital environment ). 9

16 misuses the electronic airway you provide to steal other people s property..... We have hit a balance which fully protects intellectual property, which is essential to the creative life of America, to the quality of our life, because if we do not protect the creators, there will be less creation. But at the same time we have done this in a way that will not give to the people in the business of running the online service entities and running Internet, it will not give them either an incentive or an excuse to censor. 144 CONG. REC. H7092 (daily ed. Aug. 4, 1998) (floor statement of Rep. Barney Frank); 8 see also 144 CONG. REC. H10618 (daily ed. Oct. 12, 1998). 9 Thus, with 512(c), Congress enacted special copyright rules for service providers that host expressive material on behalf of their users. Those rules have been wildly successful at accomplishing Congress s purpose. In the twelve years since Congress enacted the DMCA, the Internet has revolutionized the creation and dissemination of speech. With the help of online service providers like Wikipedia, the Internet Archive, Google, YouTube, Blogger, Twitter, Facebook, MySpace, Flickr, and many others, individuals with little technical knowledge or money can today find, create, reproduce, disseminate, and respond to content, interacting with a global audience. 10 Interactive platforms like video hosting services, bulletin boards, and social networking sites have become vital to democratic participation and the ability of Internet users to forge 8 Available at 9 Available at 10 Contrary to the assertions of UMG s supporting amici, see Brief of Amici Curiae The Recording Industry Association of America et al., UMG Recordings, Inc. v. Veoh Networks, Inc., No (9th Cir. Apr. 27, 2010) [hereinafter RIAA Br. ] at 7, these online service providers are fundamentally different from traditional broadcasting companies. Traditional broadcasters create, select and disseminate speech; Veoh gives users the tools to do those things themselves. 10

17 communities, access information, and discuss issues of public and private concern. Without the predictability provided by 512(c), however, the Internet would be a much less hospitable place for free expression and creativity. First, if an intermediary faces the possibility of potentially unlimited legal liability for content hosted, transmitted, or disseminated through its services by a small minority of users, it will feel compelled to scrutinize and limit all user activities. This is likely to lead to over-blocking, sacrificing lawful content in an effort to limit potential litigation. The strong incentive to over-block can cause particular harm to free speech where, as here, intermediaries often are not able to easily determine if the content is unlawful on its face. See generally NIMMER, supra, at 12B.04[A][1]. Because the cost to intermediaries to investigate each allegation of infringement will almost always be greater that the cost of simply removing the content, intermediaries have little financial incentive to challenge removal demands. This, in turn, will encourage abuse on the part of the governments or private litigants seeking to take down materials for censorial, rather than infringement, reasons. See, e.g., Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195, 1204 (N.D. Cal. 2004) ( [n]o reasonable copyright holder could have believed that the portions of the archive discussing possible technical problems with Diebold s voting machines were protected by copyright... Diebold knew and indeed it specifically intended that its letters... would result in prevention of publication of that content. ). Second, if intermediaries face potentially huge legal liability for the unlawful activities of a tiny minority of users, they may simply decide that it is impossible to offer some of online services, even where those services are used predominantly for lawful purposes. For example, users post more than twenty-four hours of video to YouTube every minute, the vast majority of which are 11

18 noninfringing and perfectly lawful. 11 If liability concerns arising from a minority of these videos compelled a service provider like YouTube or Veoh to pre-approve all user contributions, the service simply could not continue to operate as an open forum for user expression. The same is true of the countless online forums and blogs where users post hundreds or thousands of comments every hour. In the absence of the DMCA safe harbors, fear of liability would likely lead service providers to adopt the same clearance culture that characterizes traditional television, radio, and other mass media outlets where even entirely law-abiding creators cannot find an audience without first running a gauntlet of lawyers and insurers. Thus, turning back the clock and stripping service providers of the legal clarity provided by 512 would be catastrophic for free speech online. III. UMG s Arguments Contradict the Language, Structure and Purpose of 512(c), Increasing Legal Uncertainty at Every Turn. UMG s dangerous view of 512(c) flies in the face of Congress s intent to reduce legal uncertainty for online service providers. First, UMG and its amici misread the scope of the 512(c) safe harbor in a manner that would exclude the very online services that Congress intended to shelter. Second, UMG asserts an incorrect interpretation of the actual knowledge and red flag provisions of 512(c) that would render the detailed notice-and-takedown provisions enacted by Congress superfluous. Third, UMG and its amici urge this Court to read the control and benefit disqualifier set out in 512(c)(1)(B) so as to strip service providers of any protection from vicarious liability claims. UMG and its amici are wrong on all counts. 11 See Viacom Int l, Inc. v. YouTube Inc., Nos , , 2010 WL , at *3 (S.D.N.Y June 23, 2010). 12

19 A. UMG and Its Amici Misread the Scope of Section 512(c). Section 512(c) provides that [a] service provider shall not be liable for monetary relief, or... for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider U.S.C. 512(c)(1) (emphasis added). The accompanying legislative history demonstrates that Congress intended this provision to shelter online platforms that host and provide access to content uploaded by users: Examples of such storage include providing server space for a user s web site, for a chatroom, or other forum in which material may be posted at the direction of users. S. REP. NO , at 43. Ignoring these authorities, UMG and its amici attempt to re-write 512(c) to apply only to infringements of the reproduction right (not the distribution or public performance rights) that occur at the moment a user uploads material to the service provider s system (not when others access that content). (UMG Br. at 32-33); (RIAA Br. at 22-26). In rejecting this argument, the district court correctly observed: It is very difficult to see how the DMCA could achieve [its] goals if service providers otherwise eligible for limited liability under 512(c) were exposed to liability for providing access to works stored at the direction of users. UMG Recordings, Inc. v. Veoh Networks, Inc., 620 F. Supp. 2d 1081, 1090 (C.D. Cal. 2008); see also Viacom Int l, Inc. v. YouTube Inc., Nos , , 2010 WL , at *12 (S.D.N.Y June 23, 2010). Moreover, in suggesting that modern user generated content sites are different in kind from their 1998 ancestors, UMG and its amici willfully misunderstand how these technologies actually work. UMG contends that 512(c) should be read to reach only the initial act of data storage, and none of the subsequent acts necessary in order to make data accessible to other Internet users. 13

20 (UMG Br. at ) But the web hosting services, chatrooms, and online forums that Congress mentioned in the legislative history cited above were storing materials uploaded by users in order to make those materials accessible to other Internet users. The technological processes involved in delivering these services required those service providers to make, transmit, and download multiple copies of those stored materials. Consider the service of providing server space for a user s web site. (UMG Br. at 42) (quoting S. REP. NO , at 43). The purpose of hosting a website for a subscriber is both to store subscribers uploaded materials which comprise the web site, and to allow others to access those materials on the web site. Both in 1998 and now, the uploaded materials that comprise a web site can include many different kinds of content. Content may be any number of things family photos, poems, personal opinions, text of any kind, even sound clips and movies. PRESTON GRALLA, HOW THE INTERNET WORKS 132 (2d ed. 1999) (emphasis added) [hereinafter HOW THE INTERNET WORKS ]. The subscriber uploads this content to computers ( web servers ) maintained by the web hosting service. Id. at This results in a reproduction on the web hosting provider s computers, an activity that UMG concedes is covered by 512(c). (UMG Br. at 37.) But that initial reproduction is just the beginning of the story. When another Internet user wants to access the website, by clicking a link or typing the URL of the web site into her web browser, all the relevant content is transmitted to the user s desktop computer, where a copy is made by her web browser software in order to assemble the various material for viewing and listening. HOW THE INTERNET WORKS, supra, at 157. It is only after making a copy on the client side which UMG misleadingly characterizes as a download that a web browser software is able to render that content. Thus, in order to carry out their 14

21 function of making websites available to Internet users, web hosting services routinely transmit and download web pages to Internet users. These activities define web hosting if the service only stored information for a single user, it would be more aptly described as an online back-up service, rather than a web hosting service. This was all true in 1998, and it is true today. When Congress passed the DMCA in 1998, the category of service providers in the business of providing server space for a user s web site, for a chatroom, or other forum already included those that made multimedia files (including music and video) accessible on behalf of users. For example, one of the longest lived Internet online forums is the Usenet newsgroup system, which by the late 1990s had become the world s biggest electronic discussion forum. HOW THE INTERNET WORKS, supra, at 105. By the late 1990s, Usenet posts already included files such as pictures and multimedia. Id. Geocities is another example of a free Web hosting service dating back to 1995 that allowed millions of users to create their own web sites, including audio and video files. 12 Thus, services that hosted content for users were already automatically modifying uploaded content in order to make it more readily accessible. For example, Geocities automatically added a watermark to its users content, 13 which is analogous to Veoh s transcoding acts. (UMG Br. at 10, 15, 33.) Other services were automatically making smaller thumbnail versions of uploaded image files. See Paul Graham, Viaweb s First Business Plan, 12 See Wikipedia, GeoCities, Beverly Hills Internet, Builder of Web Communities, Changes Name to GeoCities, BUSINESS WIRE, Dec. 14, 1995, available at t;col1. 13 See Jim Hu, GeoCitizens fume over watermark, CNET NEWS, June 23, 1998, available at 15

22 (1995 business plan of e-commerce site Viaweb describing automatic creation of thumbnails ). UMG contends that Congress could never have contemplated that the beneficiaries of 512(c) would feature user-generated content on a site operated by the service provider (as distinct from simply hosting the websites of third parties). UMG is wrong. Yahoo! had already launched its Yahoo! Message Boards, where users posted materials onto a website operated and branded by Yahoo!. 14 Similarly, Compuserve had been sued by music publishers as early as 1993 for user uploaded music files that appeared on AOL s online bulletin boards. 15 These were the kinds of online services Congress meant when it referenced providing server space for a user s web site, for a chatroom, or other forum in which material may be posted at the direction of users. S. REP. NO , at 43; H.R. REP. NO , Part II, at 53. All of these services relied not only on automated copying of materials supplied by users, but also the automated transmission and downloading of those materials in order to make those materials accessible to other Internet users. Accordingly, in light of the online services already extant in 1998, it is plain that 512(c) was intended to reach far more than just the initial reproduction resulting from the act of uploading. Today s user generated content sites are simply more advanced variants built on the very same hosting activities that service providers were already providing in Thanks in part to the availability of the 512(c) safe harbor, there has been strong growth in this segment of the Internet. Today s services host 14 Courtney Macavinta, Yahoo Message Board Users Sued, CNET NEWS, Sept. 9, 1998, available at 15 See Joseph V. Meyers III, Note, Speaking Frankly about Copyright Infringement on Computer Bulletin Boards: Lessons to be Learned from Frank Music, Netcom, and the White Paper, 49 VAND. L. REV. 439, (1996). 16

23 not just simple text and images on websites, in chatrooms, and in discussion forums, but now also offer myriad platforms for speech and commerce, including web stores (e.g., Amazon zshops): 16 e-commerce listings (e.g., ebay): 17 blogs (e.g., Blogger); photographs (e.g., Flickr); documents (e.g., Scribd); video (e.g., Veoh, YouTube); and audio (e.g., SoundCloud) on behalf of tens of millions of Internet users. For example, amicus Internet Archive hosts text, audio, and video content that users contribute to its online library. Without the legal certainty provided by 512(c), these activities would be difficult for a small nonprofit to manage. If UMG s cramped interpretation of the scope of Section 512(c) were adopted, modern Internet enterprises that provide storage in the cloud for the benefit of users for a vast array of different kinds of information would be stripped of safe harbor protection. This reading is inconsistent with the statutory language and Congress s goal of providing the legal predictability necessary to foster economic growth and free expression on the Internet including new online services. B. UMG s Interpretation of the Knowledge Disqualifier Would Also Increase Legal Uncertainties Facing Online Service Providers UMG s arguments regarding the knowledge disqualifier set forth in 512(c)(1)(A) ) also cannot be squared with the language, structure, and purpose of the statute. 16 At least one court has held that Amazon s zshops.com platform falls within the scope of the 512(c) safe harbor. See Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090 (W.D. Wash. 2004), rev d on other grounds, Cosmetic Ideas, Inc. v. IAC/Interactivecorp., 606 F.3d 612 (9th Cir. 2010). 17 Courts have held that ebay and similar e-commerce listing services fall within the scope of the 512(c) safe harbor. See CoStar Group, Inc. v. LoopNet, Inc., 164 F. Supp. 2d 688 (D. Md. 2001), aff d, 373 F.3d 544 (4th Cir. 2004) (usergenerated real estate listings); Hendrickson v. ebay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) (ebay listings). 17

24 Section 512(c)(1)(A) provides that a service provider enjoys the safe harbor only so long as it: (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts and circumstances from which infringing activity is apparent [referred to in the legislative history as red flags ]; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material U.S.C. 512 (c)(1)(a). Congress also enacted an exclusionary rule that clarifies the proper application of the knowledge provisions above: any allegations of infringement received from a copyright owner that fail to comply substantially with the detailed notice requirements set out in 512(c)(3)(A) shall not be considered... in determining whether a service provider has actual knowledge or is aware of facts and circumstances from which infringing activity is apparent. 17 U.S.C. 512(c)(3)(B)(i); see also H.R. REP. NO , Part II, at 56 (explaining this provision). Thus, where the knowledge provisions of 512(c)(1)(A) are concerned, the statutory scheme makes a distinction based on the source of the knowledge evidence. If the information comes from the copyright owner, it must substantially comply with the notice requirements of 512(c)(3)(A), e.g., by including information reasonably sufficient to permit the service provider to locate the infringing material. See 17 U.S.C. 512(c)(3)(B). Upon receiving a compliant takedown notice, a service provider must respond expeditiously or forfeit the safe harbor. 17 U.S.C. 512(c)(1)(C). Thus, the actual knowledge and red flag provisions effectively do not apply to infringement notices received from copyright owners those notices either fail to substantially comply with 18

25 512(c)(3)(A), in which case they are a nullity, or they meet those requirements, in which case the service provider must respond expeditiously. In short, there is no category of knowledge evidence received from copyright owners that reaches the actual knowledge or red flag provisions. Consequently, the actual knowledge and red flag provisions in the statute apply only where knowledge evidence comes from sources independent of the copyright owner. Although likely to be unusual, such sources can be imagined Professor David Nimmer dissects a number of different hypothetical circumstances in his exhaustive analysis of the red flag requirement. See David Nimmer, Puzzles of the Digital Millennium Copyright Act, 46 J. COPYRIGHT SOC Y 401, , 445 (1999) [hereinafter Puzzles ] (discussing red flag knowledge where a subscriber contacts the service provider and signals infringing intentions and where a senior executive of a service provider chooses to investigate an unauthorized music site). 18 At the same time, however, when a service provider learns about potentially infringing activity from sources other than the copyright owner, the statutory scheme does not require a service provider to make discriminating judgments about potential copyright infringement. S. REP. NO , at 49. Thus, the flag must be brightly red indeed and be waving blatantly in the provider s face to serve the statutory goal of making infringing activity... apparent. NIMMER, supra, at 12B.04[A][1]. In this case, it is undisputed that Veoh responded expeditiously to all infringement notices from UMG s representatives that met the requirements of 512(c)(3)(A). See UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp. 2d 1099, 1107 (C.D. Cal. 2009) [hereinafter Veoh ]. The only other evidence UMG provided to Veoh directly was a list of UMG s recording artists. Id. at Available at id=

26 That noncompliant notice is an example of evidence barred by 512(c)(3)(B) s exclusionary rule. Addressing a similar circumstance, Prof. Nimmer rejects the notion that an infringement notice from a copyright owner in the form of CD-ROM with the song titles comprising its repertoire could support a finding of actual or red flag knowledge: [Section 512(c)] sets forth at great length the requisites for a valid notification of claimed infringement. Those detailed provisions could not be more at odds with the blunderbuss approach of the CD-ROM postulated in this scenario. Puzzles, supra, at 447. With respect to knowledge evidence provided by third parties to Veoh, UMG points only to evidence that Veoh had general knowledge that infringing music videos were sometimes posted by users, and that Veoh could have done more to discover such evidence if it had taken steps to monitor and investigate the activities of its users. See (UMG Br. at ) These contentions are foreclosed by the no monitoring provision in 512(m). In the words of Prof. Nimmer: Congress included language in the statute explicitly disclaiming a monitoring obligation. That feature became a leitmotif throughout the hearings, so often was it repeated. Puzzles, supra, at 451; accord S. REP. NO , at 44. Accordingly, UMG cannot rely on Veoh s failure to affirmatively monitor its service as evidence of red flag knowledge any obligation by the service provider to act arises only after actual or red flag knowledge is obtained, and that obligation is limited to acting expeditiously to remove, or disable access to, the material. 17 U.S.C. 512(c)(1)(C). Nor can general awareness that some users may be infringing copyrights strip a service provider of the 512(c) safe harbor. The statute uses actual and red flag knowledge to trigger a duty to remove infringing material something that would be impossible without particularized knowledge regarding what should 20

27 be removed. As the one court recently noted, [The DMCA s] establishment of a safe harbor is clear and practical: if a service provider knows (from notices from the owner, or a red flag ) of specific instances of infringement, the provider must promptly remove the infringing material. If not, the burden is on the owner to identify the: (sic) infringement. General knowledge that infringement is ubiquitous does not impose of duty on the service provider to monitor or search its service for infringements. Viacom Int l, 2010 WL , at *11. If generalized knowledge of infringement were enough to trigger this duty, it would impose on the service provider an obligation to monitor its system and somehow determine whether material provided by users infringed anyone s copyrights. As noted above, Congress expressly refused to condition eligibility for 512(c) on such an obligation. See Jonathan Band & Matthew Schruers, Safe Harbors Against the Liability Hurricane: the Communications Decency Act and the Digital Millennium Copyright Act, 20 CARDOZO ARTS & ENT. L.J. 295, (2002) ( knowledge should not be interpreted to mandate monitoring, citing 512(m)). In addition, if general knowledge of infringement on a service provider s system were enough to trigger the knowledge disqualifier, then the detailed notice-and-takedown provisions at the heart of 512(c) would be rendered superfluous. UMG should not be rewarded for eschewing Veoh s notice-andtakedown procedures and then attempting to justify secondary liability through evidence that major media outlets wrote stories about the widespread infringement and that content owners refused to work with Veoh. (UMG Br. at 20.) Put simply, Congress did not intend that a New York Times article could supplant the statutory notice-and-takedown regime. For these reasons, the district court correctly rejected the notion that general awareness of infringement, without more, is enough to preclude application of section 512(c). Veoh, 665 F. Supp. 2d at 1111; see also Perfect 10, 21

28 Inc. v. CCBill, LLC, 488 F.3d 1102, 1114 (9th Cir. 2007); Corbis Corp. v. Amazon.com Inc., 351 F. Supp. 2d 1090, (W.D. Wash. 2004), rev d on other grounds, Cosmetic Ideas, Inc. v. IAC/Interactivecorp., 606 F.3d 612 (9th Cir. 2010). C. UMG s Interpretation of the Control and Benefit Disqualifier Would Make Section 512(c) Inapplicable to Vicarious Liability Claims. UMG s view of the statutory control and benefit disqualifier fares no better when measured against 512(c) s language and purpose. The control and benefit disqualifier provides that a service provider enjoys the safe harbor only so long as it: does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity U.S.C. 512(c)(1)(B). UMG s interpretation of this provision amounts to the contention that 512(c) protections do not apply to vicarious liability claims, and that a successful claim ejects the service provider from the safe harbor. (UMG Br. at ) This interpretation, however, directly contradicts the stated intention of Congress: Section 512(c) limits the liability of qualifying service providers for claims of direct, vicarious and contributory infringement... H.R. REP. NO , Part II, at 53 (emphasis added); see also Band & Schruers, supra, at 318 (rejecting conflation of vicarious liability standards under common law and 512(c)). Not surprisingly, UMG s view also has been rejected by multiple courts. See Veoh, 665 F.Supp.2d at (collecting and discussing cases). But UMG s conception of the control and benefit disqualifier should be rejected for a more fundamental reason: it would radically increase the legal uncertainties facing online service providers. If the DMCA safe harbors have no application to vicarious liability claims, as UMG contends, then service providers 22

29 would be left to guess what judge-made 19 vicarious liability principles might demand. Reiterating a theme that appears throughout its brief, UMG argues that those principles obligate service providers to monitor their services for infringement using automated filtering technology. (UMG Br. at 69.) Moreover, UMG insists that suspicions or awareness of infringement trigger a duty to investigate. (UMG Br. at 75.) UMG fails to explain how a service provider is to determine whether it has done enough monitoring and investigating to satisfy this undefined obligation. As discussed above, Congress enacted the 512 safe harbors precisely to protect service providers from this high-risk approach to copyright infringement liability. IV. Section 512 Encourages Voluntary Policing by Service Providers. UMG contends that Section 512 will encourage service providers to eschew licenses from content companies and avoid implementing effective measures on their websites that can stop or limit infringement. (UMG Br. at 27.) Not so. Service providers have strong market incentives to voluntarily develop better technologies to detect and prevent copyright infringements on their web sites. While the 512 safe harbors provide an important baseline of legal protections and rules of the road for fledgling service providers, they do not give service providers consistent access to big-budget entertainment content. Accordingly, online service providers have significant business incentives to police for copyright infringement as part of voluntary commercial arrangements with major content owners. This is exactly what has happened. For its part, Veoh has voluntarily deployed a variety of anti-infringement technologies (albeit not on UMG s 19 Vicarious liability is solely a judge-made doctrine. See Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 434 (1984). 23

30 preferred timetable). See Veoh, 665 F. Supp. 2d at (describing voluntary use of Audible Magic fingerprinting technology); Io Group, Inc. v. Veoh Network, Inc., 586 F. Supp. 2d 1132, 1143 (N.D. Cal. 2008) (describing voluntarily implemented hash, or digital fingerprint, technology). And the industry leader in online video hosting, YouTube, has been a pioneer in developing and implementing infringement detection tools. See Rob Hof, YouTube Intros Video I.D. System; Will Studios Go Along?, BUSINESS WEEK, Oct. 15, Section 512(c) has been crucial to enabling these voluntary efforts between copyright owners and service providers. Because Congress made it clear in 512(m) that service providers have no legal obligation to monitor their services, service providers have been free to experiment with content identification and monitoring tools without fear that such experimentation might lead to secondary liability. In fact, this measured approach is only possible because 512(m) relieves service providers from having to embrace simultaneously every tool proposed by every copyright owner. See BILL ROSENBLATT, GIANT STEPS, CONTENT IDENTIFICATION TECHNOLOGIES 4-7 (2008) (comparing myriad filtering technologies available). 21 Ironically, the legal regime urged by UMG and its amici one in which rightsholders could unilaterally choose filtering tools and impose those tools on service providers by judicial fiat would likely slow the development and deployment of content identification technologies. CONCLUSION Reintroducing legal uncertainty would thwart Congress s clear purpose and 20 Available at os.html. 21 Available at 24